The three-year-old shopping centre Sihlcity is one of the big losers in the city of Zurich. The reasons are the position of the location in the south-west of Zurich and the unattractive tenant mix, as well as the wrong architecture.

Record new openings in Geneva
There have never before been so many debuts of top brands in the prime retail locations of Geneva. The top rent at Rue du Rhône is CHF 7,400 per square metre. Beside Panerai and Graff Diamonds, the jeweller Boucheron also has opened its first boutique in Switzerland. Audemars Piguet doubled its space at Place de la Fusterie. The French shoe-designer Christian Louboutin launched his first Swiss boutique next to Jean-Paul Gaultier.

Furthermore the following brands opened a new boutique in Geneva: Church’s, Dior Horlogerie, Fendi, Hacket London, Hervé Leger, Hublot, Lanvin, Paul & Joe, Tara Jarmon, Victorinox und Vilebrequin. Versace took over the store of Galli decoration at Place de Longemalle and paid a key money of several millions. A couple of years ago Omega also paid millions for the former boutique of Louis Vuitton.

Bern unattractive for luxury retailers
Bern is the European capital with the smallest presence of luxury goods suppliers throughout Europe. With the exception of Bally and Hermès, there are no premium retailers such as Louis Vouitton or Cartier. The highest rent recorded to date is just over CHF 6,000 per square metre. Yet the potential of Bern as a retail location is exhibited by the Christoffel-Unterführung at the main station with turnovers of CHF 29,000 per square metre per year.

New shopping centres are suffering
Shopping centres which are not well positioned mostly have difficulties, like the Westside in Bern-Brünnen. After a glamorous opening, many retailers are suffering from a lack of shoppers. As in the Sihlcity in Zurich, the potential customers do not have a reason to visit the new shopping centre.

One-way street investment market
Throughout Switzerland the Anglo-Saxonian private equity investors with excessive levels of gearing disappeared. This had a positive effect on the market because the number of investors still exceeds the number of available properties by a fair amount, and debt driven private equity investors would not have added any value on asset level. Still foreign retail real estate investors have problems setting up in Switzerland, because the Swiss property market is intransparent and oligopolies make the rules.

As with any inefficient market, Swiss retail properties are generally below the realisable and sustainable value. This is because no active asset management is performed: the majority of owners are passive, lack vision for their properties and do not engage in any kind of active property management and tenant optimisation. The interest of retailers in prime locations in Switzerland remains high, resulting in higher rents as well as key moneys.

“We are always able to find new retail spaces, but the affordable spaces are very rare. The demand for rental and purchase properties in A1 locations exceeds the supply disproportionately throughout Switzerland”, said Marc-Christian Riebe, CEO of Location Group.
 
For more information, contact Marc-Christian Riebe:
Tel: +41 (0)44 225 95 00
mcr@location.ch
www.location.ch

Photo credit: Bahnhofstrasse at night by stephenhanafin (Flickr.com)